Occidental Petroleum (OXY) Valuation In Focus After Earnings Beat Dividend Hike And Rising Berkshire Backing

Occidental Petroleum (OXY) is back in focus after reporting fourth quarter and full year 2025 earnings, pairing those results with an 8% dividend increase along with rising institutional and insider interest.

See our latest analysis for Occidental Petroleum.

Occidental Petroleum’s recent earnings update, dividend increase and new tender offers for several long dated notes have come alongside strong price momentum. A 30 day share price return of 16.94% and a 90 day gain of 26.44% have pushed the share price to US$53.08. The 1 year total shareholder return of 16.79% contrasts with a weaker 3 year total shareholder return of 9.56% and a stronger 5 year total shareholder return of 89.22%. This suggests that shorter term momentum has picked up after a mixed medium term experience for holders.

If this earnings and dividend news has you looking across the energy space, our screener of 84 nuclear energy infrastructure stocks is a useful way to find other infrastructure names to research next.

With OXY trading slightly above the average analyst price target yet flagged as having a large intrinsic discount, the key question is whether recent gains leave upside on the table or whether the market is already pricing in future growth.

Most Popular Narrative: 22.3% Undervalued

According to composite32, the widely followed narrative pegs Occidental Petroleum’s fair value at $68.29 per share, comfortably above the recent $53.08 close, and ties that gap to a very specific reshaping of the business.

OxyChem Sale: Strategic Symbiosis with Warren Buffett

The sale of OxyChem to Berkshire Hathaway for $9.7 billion in cash, announced in October 2025, is a milestone in the company’s financial history. Debt Reduction: Approximately $6.5 billion of the proceeds will be used to reduce principal debt to below $15 billion. This move directly increases Free Cash Flow (FCF) by saving approximately $350-400 million in annual interest expenses. The Buffett Factor: Warren Buffett’s acquisition of this asset is the most concrete demonstration of his confidence in OXY’s management and asset quality. As OXY’s largest shareholder (around 29%), Berkshire is no longer just an investor but also a strategic partner. While the sale of OxyChem makes OXY a more volatile “purebred” oil company, it eliminates leverage risk on the balance sheet, removing the stock’s “leveraged beta” discount.

Read the complete narrative.

Curious what supports a fair value well above the current price? This narrative leans on a specific mix of earnings power, margin assumptions and cash flow durability. It also bakes in expectations around carbon removal economics and future profit multiples that may surprise you.

Result: Fair Value of $68.29 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, this hinges on DAC economics and policy support holding up, and on OXY avoiding pressure from weaker inventory quality that could strain future cash flows.

Find out about the key risks to this Occidental Petroleum narrative.

Another Take: Valuation Looks Stretched on Earnings

That 22.3% undervaluation story sits awkwardly next to how the market is pricing Occidental on earnings today. At a P/E of 38.8x versus 14.4x for the US Oil and Gas industry and 26.5x for peers, and above a 27.1x fair ratio, the share price embeds a lot of optimism. If sentiment cools, could the multiple move closer to that fair ratio instead?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If this mix of optimism and caution feels familiar, consider taking action while the facts are fresh and weigh both sides for yourself with 2 key rewards and 3 important warning signs.

Looking for more investment ideas?

If you are serious about tightening up your portfolio after reading this, do not stop at one stock. Use the tools that surface ideas for you.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com